USTR Announces New Trade Preference Enforcement
The Office of the United States Trade Representative (USTR) has announced the outcome of an annual review under the Generalized System of Preferences (GSP). Outcomes include the launch of a self-initiated country practice review of Bolivia’s compliance with the GSP eligibility criteria related to child labor and changes to the list of products eligible for GSP treatment.
The announcement on also removes certain products from the GSP program where the country is sufficiently competitive and no longer needs tariff preferences to compete in the US market; adds certain travel goods to the list of eligible products for all GSP countries where there is currently minimal US production of these products; and add several non-import sensitive products to GSP, all of which are used as inputs in US manufacturing.
“Trade under GSP provides strong incentives for developing countries to make market-oriented reforms and provide greater access for American goods and services,” said US Trade Representative Robert Lighthizer. “The actions announced today are aimed at strengthening our trade enforcement efforts and supporting US manufacturing.”
Under the GSP program, certain products from 120 beneficiary developing countries and territories can enter the United States duty-free. In 2016, the total value of imports that entered the United States under GSP was $18.7 billion. To qualify for GSP, a beneficiary country must meet eligibility criteria established by Congress, including respecting arbitral awards, combating child labor, respecting internationally recognized worker rights, providing adequate and effective intellectual property protection, and providing the United States with equitable and reasonable market access.
The country practice review of Bolivia was provoked by the government of Bolivia passing a law in 2014 permitting child labor starting at age 10 years. According to the USTR, this law raises questions about consistency with GSP statutory country eligibility criteria. The goal of this action is to review Bolivia’s child labor laws and practices to determine whether Bolivia’s current law and practices meet the GSP criteria and, if necessary, to engage with the government to encourage steps by which Bolivia could ensure compliance.
The Trade Preference Extension Act (TPEA) of 2015 gave the President, for the first time, the authority to add certain travel and luggage goods products to GSP—including luggage, handbags, backpacks, and pocket goods—subject to the regular, petition-driven review process. In June 2016, the previous administration added eligibility for travel goods for African and least developed GSP countries. Members of Congress have shown a strong interest in seeing GSP access for travel goods extended to all GSP countries. US travel goods brands and retailers have indicated that this action would help them broaden their sourcing opportunities for these products. According to the information provided in the course of USTR’s review, making travel goods GSP-eligible for all GSP beneficiaries is expected to be neutral with respect to overall US import levels, and therefore also to the US trade balance, though this action may shift some of the overseas production of these products from non-GSP countries to GSP countries.